NFA takes emergency enforcement action against Texas CTA FIN FX LLC and its principal

April 26, Chicago – National Futures Association (NFA) announced today that it has taken an emergency enforcement action against FIN

April 26, Chicago – National Futures Association (NFA) announced today that it has taken an emergency enforcement action against FIN FX LLC (FINFX) and its principal, Leon L. Wolmarans. FINFX is a Commodity Trading Advisor located in Carrolton, Texas.

NFA’s investigation found that FINFX and Wolmarans attempted to solicit customers with false and misleading information, including deceptive performance claims on FINFX’s website. Additionally, FINFX and Wolmarans provided misleading information to NFA and failed to cooperate with NFA in its examination of the firm by failing to provide information and produce records requested by NFA.

Based on NFA’s investigation, NFA’s Executive Committee issued a Member Responsibility Action (MRA) and Associate Responsibility Action (ARA) against FINFX and Wolmarans which suspended them from NFA membership, effective immediately. FINFX and Wolmarans are also prohibited from soliciting or accepting funds from customers or investors and soliciting any investments for any investment vehicles. FINFX and Wolmarans are prohibited from disbursing or transferring any funds from any accounts (including securities, commodities, and forex) without prior NFA approval.

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The MRA/ARA will remain in effect until such time that FINFX and Wolmarans demonstrate that they are in complete compliance with all NFA Requirements. FINFX and Wolmarans may request a prompt hearing before NFA’s Hearing Committee.

The complete text of the MRA/ARA can be found on NFA’s website (www.nfa.futures.org).

But here are the most interesting parts of it:

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1. FINFX is an NFA Member CTA and became registered as a CTA on December 6,2007. Wolmarans is FINFX’s sole AP, an NFA Associate and sole listed principal, and has been since December 6, 2007. FINFX is located in Carrolton, Texas.

2. In early March 2011, NFA received a call from an individual inquiring about a company called FIN FX. This individual wanted to know if NFA was able to provide an opinion about this firm. NFA conducted a Google search and found the website, www.fin-fx.com, which appeared to be for FINFX. Although FINFX had not indicated that it operated a website in its last annual questionnaire filed with NFA in 2010, the firm had previously indicated that this website belonged to the firm in 2009.

3. NFA reviewed the website and found information that was extremely troubling. Specifically, the website included performance for various managed account programs purported to be operated by FINFX. The website posted performance for a “1520 Trading System” for the time period of January 1999 through September 2008 with annual rates of return ranging from 39.12% to 116.08%. lt also contained performance for a”1487 Trading System” for the same time period with annual rates of return ranging from 30.76% to 67.07%. A separate section of the website contained rates of return for a “Sentiment Program” from February 2007 to January 2008 with a twelve-month return of 36.05% and the “Sentiment Aggressive Program” with a rate of return from July 2007 to January 2008 of 57.73%.

4. Further, the website contained a section entitled “Mini Forex Trading Contest” winners, showing the 1st Place winner was an individual who garnered a return of 354.27%.

5. FINFX’s website gave the impression that this firm was clearly soliciting for new customer accounts. Additionally, other than one small link to FXCM, it was not clear to potential customers what entity would serve as the counterparty to their forex transactions.

At the same time, NFA independently obtained account opening documents from FXCM for what turned out to be three accounts that were owned by Wolmarans. In reviewing these documents, NFA learned that another individual named Stephen Botes (“Botes”) was also listed as the Vice-President of FINFX and appeared to be an unlisted principal. Both Botes and Wolmarans are believed to be South African nationals. NFA also independently conducted an internet search relating to Botes and found that in December 2005 a “Stephen Anthony Botes” was a named defendant in a complaint in the High Court of South Africa and was charged with defrauding innocent persons in South Africa and Namibia  through false representations. The complaint alleges that through the entities Webforex, Ltd. and Webforex USA, Inc., Botes and an individual named “Leon Lourens Wolmarans” collected $12.5 million to be used for trading purposes but instead they used the money to fund their own personal lifestyles. The documents also allege that in 2006, both Wolmarans and Botes fled South Africa for Texas.

On one hand it’s good that the NFA stopped these guys but this raises another question – how did the NFA approve them in the first place if it now easily found this alarming information just by Googling?

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